Scott, I do not see here anyone even hinting at a severe downturn. Maybe that is a problem, the worst I have "forecasted", was a growth of only 5% to 7% in semi equip shipments this year (I will probably have to revise that down as time goes by). On the other hand, in mid September, you were giving all of us (at least those of us that refused to see beyond the then current rosy picture the following lecture:
Message 14383730
here is what you said then: "The visibility resolution during the next couple of months will drive the vast majority of equipment stocks to new highs. The large caps stocks will certainly participate.", that was when the sox was at about 1000. Since then the Sox visited 535, and has now regained 34% , but not enough to get us above that 1000, where according to you, we should have been buying without fear, since hew highs are around the corner. Mind you, the current bounce is not even as great as the first bounce we had from late May (Sox at 869) to the June/July peak at 1269 (a 46% advance). Note, that buying the temporary bottom in late May, without selling a month or two later, would have left you today (after the current rally) still under water. So please, do express you opinion, it is interesting and enlightening, but spare us the "lectures" about the threadsters either being "too bearish" or too bullish.
As for my own opinion, which I hope I am free to express, bear markets often have three distinct down moves, unfortunately, we cannot see these while we are still in the midst of these moves. I think, however, that the late March to Late May move was the first down leg, the mid July to late December (Dec. 20th to be accurate). was possibly the second leg down, and we still need to go through a third down leg. I for one expect a peak of the current move to either have been reached this week, or at the latest, to be reached within few days of the next FOMC meeting (January 1st). I doubt that this recovery will even get to be as powerful as the June recovery (46%), nor do I expect a "broad topping" like in June (it took a full month from June 21st, when we reached 1269 to July 17 when we reached that level again to put a solid double top in place). Typically, recoveries from the second leg down are shallower (thus the current 34% is almost as much as one can expect). Many technician, including myself, viewed the 700 area on the SOX as a critical area, it would thus be befitting for the stock manipulators on the street to close us somewhere above that point, to generate sufficient buying enthusiasm into which the "powers" can distribute". Gee, I would not be surprised to even see few upgrades just here. (g).
To put it mildly, those that practice preservation of capital, may very well use the next 10 days or so to take some well earned profits in the sector, I fully believe that comes the ides of March, much better prices than today's prices should be available. I have no idea if the SOX will make a new low under 535, and there are even some stocks, which I believe have already put in their lows for the cycle, but I also think that coming comparison to last years results and relatively less optimistic "looking forward" statements, will eventually take their toll. The December 20/January 3 bottom is as close to a V bottom as we have seen in this sector, if we are setting a bottom, as Gottfried mentioned once, we often have few months of basing to "certify" it as a bottom.
Good luck to all.
Zeev |
